The car choices for some characters weren't exclusively made due to a combination of performance and personal taste: the characters' financial situations played a massive role in it as well:
Amateur car enthusiasists, like the Akina Speed Stars, use affordable vehicles: Iketani's S13 Silvia and Kenji's 180SX were rather cheap when Initial D was first released, whilst Itsuki's AE85 was a bottom-of-the-barrel pick due to being the more economical trim of the AE86. Case in point, Itsuki's still in high school when he purchased his AE85. A similar argument could be also extended to the Fujiwaras' AE86, as it was an entry-level car for street racers at the time, but that argument is quickly shot down by the simple fact that Bunta bought the car long before, likely when it was still new.
Related to that last point, the Fujiwaras clearly don't have financial issues in spite of their very modest living style, since Bunta can casually buy a brand new, full optional, two-door Impreza GC8F. The reason he bought the AE86 is that, as shown by his motorsports connections, Bunta was savvy enough to pick the best possible car for mountain racing: unassuming, light-weight, with an ideal chassis and suspension set-up to keep its drivers well-trained.
The Takahashi Brothers come from a wealthy family, with Ryosuke enrolled in university and studying to be a doctor through-out the series. Moreso, some mention that the Red Suns have been featured on the cover of several racing magazines in the past, which must have been a source of profit through royalty payments. Their cars are the more expensive, atleast at time, RX-7 FC3S and FD3S, which also require more active maintenance, and thus more expenses, to remain in top shape.
Like the Takahashi brothers, the two heads of Purple Shadow in Fourth Stage are financially loaded: Toshiya "God Arm" Joshima is a doctor, whilst Kozo "God Foot" Hoshino openly claims he could afford a new Ferrari, but he sees no point in buying one: instead, he's bought four separate Skyline GT-Rs, three of which were brand new.
As Project D goes on, the races go from flashy drifting and showy overtakes to more refined racing (compare Keisuke and Takumi's first race to both of their techniques in Fifth Stage. Takumi drifts less and Keisuke barely drifts at all). Moreover, fewer and fewer people are shocked out of their minds when Takumi and Keisuke win a race. Why? Because not only are they growing their legend with each race, but Ryosuke planned Project D so they would consistently go up against harder and harder opponents, ending with the best street racers in the region. As they move up, driver skill increases. Awesome, but Impractical displays of driver skill might work against lower-level drivers, but against such high-skilled opponents, practical driving, tire management, and vehicle control are far more important. Moreover, it's not like Takumi and Keisuke are any less amazing, it's just that their opponents go from shocked in total disbelief at their abilities, to more of a genuine admiration for the sheer skill and technique they both possess.
Where does Nakazato find the money to do... well, anything, really? Even though his car is implied to be one of the earliest models of R32 GT-R, and a second-hand one at that, those were never cheap, even in the time frame in which Initial D takes place. Compared to the rest of the Night Kids' cars, his is by far the most expensive of the group. Moreso, Takeshi himself implies he frequently crashes or damages his car's bodywork, even though we only see it happen twice through-out the series.
